Money & taxes

Daycare profit margins: what’s normal, what moves them

The honest numbers — and the seven levers that actually change them.

Childcare is a labour business with regulated ratios — margins are structurally tight, which makes the few real levers matter enormously. Model your own numbers in the free calculator as you read.

The seven levers

  1. Occupancy — the brutal one. At 75% occupancy most centres lose money; at 95% the same centre is comfortable. Every unfilled spot is pure margin walking out the door; an active waitlist is your insurance. (Fill spots →)
  2. Room composition — infant care has the highest fees and the heaviest ratios (1:4 in BC). The margin sweet spot is usually a 3–5 room running near its 1:8 maximum; design your licence around the math, not just demand.
  3. Staff scheduling against actual attendance — staggered shifts matched to your arrival curve beat everyone working open-to-close. Live attendance data shows you the curve.
  4. Wage stability over churn — replacing an ECE costs months of disruption and recruiting. Paying slightly above market is usually cheaper than turnover.
  5. Collections — automated billing, cards on file, and a real late policy. 2–3% of revenue quietly leaks here at most centres.
  6. Funding programs — in BC, CCOF/CCFRI/wage enhancement materially change the equation. Make sure you're capturing everything you qualify for.
  7. Overhead per child — your software stack is the easy win: many centres pay $150–$400/mo for childcare software alone. Mitten is free up to 5 children, then $20/mo + $2/child — for a 30-child centre that's $68/mo vs $200+, every month, forever.

Know your number weekly, not yearly

Margins die quietly between annual accountant visits. A live dashboard — revenue, occupancy, payroll hours — turns "we should look into that" into a Tuesday-morning fix. That's exactly what Mitten's director profitability view is for.

Run your daycare on Mitten — free to start

Mitten does everything in this guide — daily reports, photos, messaging, billing, even payroll prep — free for your first 5 children, then just $20/mo + $2 per child.

Start free — no card needed →  See the live demo

Frequently asked questions

What is a typical daycare profit margin?
Commonly cited ranges run roughly 5–15% for centres, with well-run programs reaching 15–20%+. Home daycares often see higher percentage margins on much smaller revenue.
What’s the biggest cost in a daycare?
Staffing — typically 60–75% of total costs for licensed group care, which is why ratios and room composition dominate profitability.